get out of the gate fast with implementation best...

Get Out of the Gate Fast With Implementation Best PracticesDavid LeGrand, Sr. Manager – Product Marketing, AspenTech

Mike Monteith, CEO, Strategic Estimating Systems

October 18, 2016

© 2016 Aspen Technology, Inc. All rights reserved.2

Mike MonteithCEO, Strategic Estimating Systems

Today’s Presenters

David LeGrandSr. Manager - Product Marketing, AspenTech

© 2016 Aspen Technology, Inc. All rights reserved.3 © 2016 Aspen Technology, Inc. All rights reserved.3

Agenda

• Challenging Industry Environment – A different approach is available

– Best Practices and Pitfalls

– Organizational Success Factors

• Adoption Pathway

• Resistance to Implementation

• How Others Have Won


Those that will benefit

Cost Estimators

Process Engineers

Project Control


The Environment

Upstream projects hit hard“What began in late-2014 as a haircut to discretionary spend on

exploration and pre-development projects has become a full

surgical operation to cut out all non-essential operational and

capital expenditure.”, commented Mr. Angus Rodger, Principal

Analyst – Wood Mackenzie

Projects are smaller and more incremental"The majority of contracts are now [lump-sum] EPC fixed

price, where owners are taking advantage of the lower oil

scenario and pushing prices down through the value chain.

Megaprojects in the reimbursable EPCM space are more

limited. [Invitation to bids] are at the reduced level

commensurate with the project scenario outlined above,”

commented Graham Hill, EVP Business Development -

KBR


Pathway

• It’s not a journey, it’s a pathway

that’s been well traveled by others

• Evaluate, Optimize and Deploy are

major steps for implementation

• AspenTech – providing leading edge

innovative software and Strategic

Estimating Systems (SES) –

providing estimating knowhow, can

assist in moving down this pathway


Drawbacks of Proprietary Spread Sheets

Labor costs It’s hard to compress labor to manage spread sheets

Quality checking Data consistency and re-entry of data

Transparency Lack of the ability to see underlying calculations are performed

Inconsistencies Differences in approaches and methodology between estimators

Change control Cascade of changes during revisions and request for changes

AccuracyAbility of factor-based methods to handle estimates outside of known parameters


Best Practices and Pitfalls

Leadership sponsorship

Consistent communication plan

Vision to change

A team centric plan

Constructing a new business process


Success Factors

Designate a Technical Champion

Designate a Business Champion

Develop confidence and

commitment to the system

Train to understand the

software, but also the business

process

Collaborate


Viewer Poll

What are the barriers

to organizational

change at your

company?


Implementation Pathway

Evaluate

Empower the team to understand the current environment

• Current workflow

• Roles and responsibilities

• Methodologies

Kickoff and Planning

Sample Estimation


Run a Sample Estimate

Choose a “standard or routine” estimate as basis

Run your estimate

What are the differences in the two?

What have you learned?

What areas need to be inspected?



Optimize

Empower the team to test and fine tune

• Code of Account definition

• Reusable template creation

• Tune at high level group level

Customization

Calibration

Move from “Engineer in a Box” to a system that reflects your

workflow and business environment


Overview of Calibration

• Calibration is an essential process for gaining maximum accuracy and efficiency from

ACCE

• Calibration may be desired with each pricing update to bring costs in line with local

conditions

• If a company has multiple fixed locations it may be desirable to create a calibration for

each of the locations


Why Calibrate?

Account Why calibrate?

Equipment Purchasing agreements

Local purchasing

Materials Purchasing agreements

Local purchasing

Piping specs Project-specific specifications

Field labor rates Location not covered by cost basis

Union labor

Field labor productivity Site conditions

Engineering man-hours Home vs remote offices

Project complexity

Engineering rates Home vs remote offices

Company cost structure


Conceptual and detail workflows vary on the effort

ACCE also adapts to the company specific requirements

• Document the sources of

information for the

estimate

• Determine the estimate

schedule

• Receive information and

review for completeness

• Equipment List

• Develop project

components from

equipment list

• Capture non-equipment

items (Site preparation,

electrical and

instrumentation scope)

• Add areas

• Capture design basis

• Adjust bulks

• Incorporate execution

strategy

Preparing the information Develop scope Refine scope Adjust cost

Typical Workflow to Develop an Estimate Using ACCE

Ensure consistency with engineering data

Ensure scope completeness

Align expectations of estimator and end user

• Adjust quoted items

• Calibrate remaining

components

Adjust costs and MH based on history


Work Process – Detailed Estimates

• Estimate Plan• Specs required

from disciplines are

defined

• Schedule of when

information is due

to estimating– Specs– Scope documents– Additional scope

items– Pricing– Construction

information

• Kick-off Meeting

• Enter Equipment –

from data sheets

• Enter Other Scope

based on engineering

deliverables

– Buildings

– Site work

– Pipe racks

– Interconnecting piping

• Modify selected system

defaults with project

specific scope items

– Basis of design

– P&IDs

– Miscellaneous MTOs

• Enter Plot Dimensions

– Area definitions

– Process control

– Power distribution

• Define Project

Execution

– Subcontracts

• Use procurement

cost

• Modify labor rates

and productivities

• Quoted equipment

Preparing the information Develop scope Refine scope Adjust cost


Calibration Steps

Capital Cost Estimator Output = Qualified Location & Time Specific Cost Model

Interfaced with recent project resources: Final Cost Report, Project Engineer, Lead Estimator and Project Controls

Quantities (sorted by COA)

Equipment Prices (by COA)

Material Prices ( by COA)

Labor MH ( by COA)

Labor Rate

Adjust product & area specs, assumptions, components

Apply % of equipment costs in component options

Adjust indices in bulk commodity project specs

Adjust indices in direct field labor project specs

Apply Labor rate in general rates project specs indices

Compare a recent project

completed “as-built’ data side by side

with initial ACCE model

Analyze and re[index ACCE as necessary to Final Cost of Recent project, Key

Quantity Items

Compare ACCE Estimate to Early and Baseline Project Estimates and Final Costs

of Recent Project



Deploy

Empower the team to build confidence

• Fine tune Equipment, Materials and Engineering at detailed level

• Implement new workflow within business

Parallel Usage

Full Deployment

Build confidence by measuring against known system

Expand the visibility of use


In With the Good, Out With the Bad

“ ACCE results show that it isn’t as accurate as the current system

used”

“I still need to run my specialized spreadsheets, because I trust

them”“I like my current workflow and ACCE must fit into the existing

estimate workflow process”

“It seems like I spend a lot of time adding information for conceptual

estimates”


How Others Have Won


Webinar SummaryBest Practice for Implementing the Global Standard of Cost Estimating

• We do live in a challenging environment for

EPC’s and owner operators alike

• Management backing is an integral part of

success

• Basic steps of implementation are Evaluate,

Optimize and Deploy

• There is a better way than Excel-based

proprietary spread sheets than contribute to

speed and accuracy improvements


Additional Resources

White Paperwww.aspentech.com/strategic-weapon/

Infographichttp://www.aspentech.com/winning-infographic/

Resource Centerwww.aspentech.com/estimating-resource-center/

http://www.aspentech.com/strategic-weapon/

http://www.aspentech.com/winning-infographic/

http://www.aspentech.com/estimating-resource-center/


Sharpen Your Bid – Calibrating

ACCE Into a Strategic Weapon

November 8, 2016

Streamline Engineering

Projects - From Bidding to

Executionhttp://www.aspentech.com/epcperspectiv

es/streamline-projects/

Improve Collaboration on

Estimates Early in Your Projecthttp://www.aspentech.com/estimates-

early-project-Aug2016/

Upcoming and On-Demand Webinars

http://www.aspentech.com/epcperspectives/streamline-projects/

http://www.aspentech.com/estimates-early-project-Aug2016/

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Q&A

David LeGrand

[email protected]

Mike Monteith

[email protected]

mailto:[email protected]

mailto:[email protected]

AspenTech is ranked as a top innovative growth company

Thank You

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